Guides
Liability exclusions: what Coverage E won't pay
The HO-3's Section II exclusions: intentional harm, business, vehicles, aircraft, contracts, your own property and more, with exceptions and the usual fixes.
Coverage E, the personal liability section of a homeowners policy, does not pay for injury you cause on purpose, for anything arising from a business, for most motor vehicle, boat and aircraft accidents, for professional services, for liability you took on by contract, for damage to your own property, or for injuries to you and your resident family. Those are the main Section II exclusions in the ISO HO-3. Each has exceptions, and each has a usual way to fill the gap, so an exclusion is a reason to buy another policy rather than a reason to assume you are exposed.
This guide follows form HO 00 03 05 11, the 2011 edition posted by the Maine Bureau of Insurance. Newer ISO editions and insurers' own forms differ, and some of the differences are noted below. Your policy and its endorsements control. For what Coverage E does pay, see Personal liability coverage (Coverage E) explained.
How Section II is organized
The form groups its exclusions by which coverage they remove, and the grouping decides what is lost.
- Exclusions A through E apply to both Coverage E and Coverage F. That means no defense and no damages, and no medical payments either. This group holds the vehicle, watercraft, aircraft and hovercraft exclusions, plus intentional injury, business, professional services, uninsured premises, war, communicable disease, abuse and controlled substances.
- Exclusion F applies to Coverage E only. It holds contractual liability, loss assessments, your own property, property in your care, workers' compensation-type claims, and injuries to you or an insured.
- Exclusion G applies to Coverage F only. It keeps medical payments from going to workers' compensation claimants and regular residents of the insured location.
Exclusions limit coverage but do not erase the insurer's duty to look at the claim. In most states, an insurer must defend a suit if any allegation could fall within coverage, even when other allegations are excluded. It may defend under a reservation of rights letter while it decides whether an exclusion applies. State law differs on the details. what happens when someone sues you after an injury at your home explains what a reservation of rights means for you.
The exclusions, one by one
| Exclusion (HO 00 03 05 11) | What it removes | Main exceptions | Usual fix |
|---|---|---|---|
| Motor vehicle liability | Liability from a vehicle registered for road use, or one that must be registered where the accident happens; racing, rental, use for a charge or business | Dead storage, vehicles used to service a residence, mobility aids, off-road recreational vehicles on insured locations, some golf carts | Auto policy; see Golf carts, boats and ATVs under a homeowners policy |
| Watercraft liability | Racing, rental, charter and business use, then all watercraft except stored boats and those under size and horsepower thresholds | Small outboards, sailboats under 26 feet | Boat policy or endorsement |
| Aircraft and hovercraft | All liability from aircraft and hovercraft | Model or hobby aircraft not designed to carry people or cargo | Aviation policy; see drones, firearms and other liability gray areas |
| Expected or intended injury | Harm you expected or intended, even if it differs in kind, degree or victim from what you intended | Reasonable force to protect persons or property | None; this is not insurable |
| Business | Injury arising from a business conducted on or off the insured location | Occasional or partial residential rental; under-21 part-time self-employment; activities paying under $2,000 in 12 months | Business or home business policy |
| Professional services | Injury from rendering or failing to render them | None in the form | Professional liability |
| Premises that are not an insured location | Injury arising from land or buildings you own, rent or rent out that are not insured locations | Injury to a residence employee in the course of work | Landlord or rental policy |
| War, communicable disease | Injury from war; injury from transmitting a communicable disease | Not applicable | Health insurance for the person harmed |
| Sexual molestation, corporal punishment, physical or mental abuse | Injury arising from these | None in the form | None |
| Controlled substances | Injury arising from use, sale or delivery of federally controlled substances, with marijuana named | Prescription drugs used lawfully | None |
| Contractual liability (Coverage E) | Liability under any contract you signed | Written contracts relating to an insured location, or assuming others' liability before the occurrence | Umbrella and contract review |
| Property you own (Coverage E) | Damage to property owned by an insured | None | Property coverage under Section I |
| Property in your care (Coverage E) | Damage to property rented to, occupied by or in the care of an insured | Damage caused by fire, smoke or explosion | Renter's policy or event coverage |
| Workers' compensation claimants (Coverage E) | Injury to someone eligible for workers' compensation or similar benefits you provide | None | Workers' compensation; see household employees and workers' comp |
| Injury to you or an insured (Coverage E) | Injury to you or a resident relative, and claims to repay or share damages with someone who owes them | None | Health and disability insurance |
| Loss assessment | Association assessments, except the $1,000 additional coverage | Section II Additional Coverage D | Loss assessment coverage for HOA and condo owners |
The Section II exclusions also have a carve-back for household staff: the vehicle, watercraft, aircraft, hovercraft and uninsured-premises exclusions do not apply to bodily injury to a "residence employee" arising out of and in the course of employment. Workers' compensation rules still decide whether that claim belongs on your homeowners policy.
The ones that cause disputes
Expected or intended injury
The wording turns on what the insured expected or intended, not on whether the act was careless. A punch intended to hurt one person that injures another is excluded; a guest who trips on a loose handrail is not. The exception for reasonable force to protect persons or property matters when a homeowner uses force against an intruder, and whether the force was reasonable is for a court or the insurer's investigation to decide. Expect a reservation of rights whenever a complaint alleges both negligence and intent.
Business
Under the form, a business is a trade, profession or occupation, full-time, part-time or occasional, or any activity engaged in for money or compensation, with exceptions: activities where no insured receives more than $2,000 in total compensation for the 12 months before the policy period, volunteer work and certain home day care. The exclusion reaches injury arising out of a business "conducted from an insured location or engaged in by an insured," whoever owns the business. Selling crafts online, driving for a delivery service or watching neighbors' children for pay can all trigger it. Premium for a policy that includes no business coverage assumes you have none. See running a business from home: the insurance gaps.
Motor vehicles
The definition of "motor vehicle" in the 2011 form is any self-propelled land or amphibious vehicle, and any trailer carried by or hitched to one. The liability definition reaches ownership, maintenance, operation or use "by any person," plus entrustment and negligent supervision. Lawn tractors and minibikes that never leave your property are the common surprises, and so is an accident that happens during a host's party. An advisory notice for North Carolina's 2027 program, which is based on ISO's 2022 edition, says the revised definition counts operation "only by an insured, instead of by any person," that the exclusion now allows coverage for a riding lawn mower mowing a lawn that is not associated with a residence, and that the motor vehicle definition now includes vehicles "capable of being self-propelled" (NC Rate Bureau, Circular P-25-5). That program takes effect June 1, 2027, and not every insurer or state uses it.
Property in your care
If you break a borrowed boat's windshield, a rented hall's floor or a friend's lake cabin, Coverage E does not pay because the property is in your care. The one exception is damage by fire, smoke or explosion. A tenant who sets a fire in a rented unit has liability protection; one who floods it does not. Ask the host of any event rental for the insurance they require.
Injury to an insured
Resident relatives are insureds, so a family member hurt on your property cannot claim against Coverage E. Their medical bills go to health insurance, and Coverage F excludes regular residents of the household. Adult children who live elsewhere are third parties, a point covered in who is insured on a homeowners policy, and who is not.
Exclusions your insurer may add
The ISO form is a baseline. Insurers write their own forms and attach endorsements, and the endorsements often matter more than the base text. Common additions include dog breed lists and animal exclusions (dog bites, breed lists and homeowners liability), limits on trampolines, diving boards and swimming pools, exclusions for injuries from criminal acts, and home-sharing rules. The ISO 2022 revision moves home-sharing host activities into the policy itself and adds a cannabis definition, according to the North Carolina notice. The ISO form has no criminal-acts exclusion, so seeing one in your policy means your insurer wrote it.
The test is the declarations page. It lists endorsements by form number, and each one can change Section II. Request every form number listed and read the liability wording in each.
Reviewing your own exposures: five steps
- List what you do, own and host. Business income, rentals, boats, ATVs, drones, dogs, a pool, a home-based sitter, frequent parties.
- Pull Section II and every endorsement listed on the declarations page.
- Match each item to an exclusion in the table and note the exception that might apply.
- Ask your agent in writing how the policy treats each item that is unclear, and keep the answer.
- Close the gaps with the fix in the table: a business policy, boat or vehicle coverage, a landlord policy, or an umbrella policy that picks up what the underlying policy can't. An umbrella often repeats these exclusions, so confirm it.
A hypothetical comparison
Say a neighbor's child is hurt at your home while you are babysitting for $15 an hour, and the same week your riding mower throws a rock through a car window while you mow a vacant lot you own. The first claim may meet the business exclusion if the pay exceeds the $2,000 threshold, and the second turns on whether the lot is an "insured location" (vacant land you own is) and on the mower's registration status. Neither outcome is certain. The point is that ordinary weekends produce coverage questions, and the answers sit in the exclusion wording.
Key takeaways
- Section II exclusions remove coverage for intentional harm, business, professional services, most vehicles, boats and aircraft, contractual liability, your own property, and injuries to household members.
- Exclusions A through E also remove medical payments coverage, while Exclusions F and G target Coverage E or F alone.
- Exceptions are narrow and specific: hobby aircraft, small outboards, occasional rental, fire damage to property in your care, and reasonable force.
- Insurers add their own exclusions through endorsements, and ISO's newer editions change some wording, so check your declarations page and each listed form.
- Match each exposure you have to an exclusion, then fill the gap with the policy built for it before a claim.